Wall Street futures slide as US bond yields climb to multi-year highs

Wall Street was set for a weak market opening as stock futures dropped sharply during Thursday's trading session. Investors remained worried about climbing bond yields and wild swings in crude oil prices.

Market Losses

Nasdaq futures dropped by one full percent. S&P 500 futures fell by zero point four percent, and Dow Jones Industrial Average futures declined by zero point six percent.

Rising Bond Yields

These drops came after US Treasury yields surged in the previous session. The benchmark ten-year yield climbed roughly zero point fifteen percentage points to reach five point eleven percent, marking its highest point in nearly nineteen years since 2007. At the same time, the two-year Treasury note yield increased by over zero point eleven percentage points to four point eight eight nine percent, hitting its highest mark since May 2024. The thirty-year Treasury yield also moved up by zero point zero nine percentage points to touch a peak not seen since 2007.

Economic Causes

Bond market mood soured after strong S&P Global manufacturing and services PMI data showed solid economic growth. This data boosted market bets that the Federal Reserve might raise interest rates again as soon as October. Weak buyer demand at a five-year Treasury note sale added more pressure to the bond market.

Fed Officials Speak

Fed Governor Michael Barr stated in a recent speech that more rate increases are likely needed to pull inflation down to the central bank's two percent goal. Williams noted that the Fed is moving away from clear forward guidance, choosing instead to check incoming economic data before making policy choices. US inflation has stayed persistently high, which led the central bank to raise its short-term interest rate last week for the first time in three years. Following that increase, data from the CME Group's FedWatch tool showed that the chance of another quarter-point hike in October jumped to sixty-six point four percent, up from fifty-five percent the day before and under ten percent a month ago.